\u3000\u30003 China Zhenhua (Group) Science & Technology Co.Ltd(000733) 00073)
Core view
In 2021, the company made a profit of 1.091 billion yuan, exceeding the performance forecast range. The company achieved a revenue of 8.258 billion yuan in 2021, a year-on-year increase of + 159%; Corresponding to Q4, the revenue was 3.086 billion yuan, a month on month increase of + 41%. In 2021, the company realized a net profit attributable to the parent company of 1.091 billion yuan, a year-on-year increase of + 183%; Corresponding to Q4, the net profit attributable to the parent company was 364 million yuan, a month on month increase of + 30%. In 2021, the company’s gross profit margin was 18.24%, a year-on-year decrease of 0.97pct; The net interest rate was 13.21%, up 1.00pct year-on-year. The significant increase in operating performance mainly benefited from the significant increase in sales scale and the cost advantage brought by inventory management during the price rise of raw materials.
The company’s production capacity expanded rapidly and cathode shipments increased rapidly. In 2021, the sales volume of diversified materials of the company was 43600 tons, a year-on-year increase of + 108%; The sales volume of lithium cobaltate was 3600 tons, a year-on-year increase of + 20%. Looking forward to 2022, Changzhou phase II base of the company is expected to be completed in the second half of the year, contributing to the performance, and the annual positive effective capacity is expected to reach 100000 tons (including outsourcing). With the continuous volume of skon and LG new energy, we expect that the sales volume of cathode materials of the company is expected to exceed 90000 tons in 2022, with a year-on-year increase of 105%.
The layout of the company’s raw material side continued to deepen, and the profitability of a single ton was steadily improved. 2021h1 company has a raw material inventory of 316 million yuan. Benefiting from the improvement of capacity utilization and low-cost inventory, the company’s profitability has improved significantly. In 2021, the company’s net profit per ton of three yuan cathode was 20900 yuan, a year-on-year increase of + 8000 yuan. The upstream layout of the company continues to deepen. In terms of nickel and cobalt, the company has reached a purchase agreement with Liqin resources, established a joint venture plant with Finnish mining, and actively participated in Zhongwei overseas nickel project; In terms of precursors, the company signed long preferential orders with Zhongwei and Huayou to ensure supply. Through the deepening of the layout of the raw material end, the profitability of the company is expected to be optimized. The company’s advanced technology has been rapidly distributed, and significant progress has been made in the research and development of a variety of positive electrodes. In terms of ternary cathode, the company’s reunited single crystal composite high nickel products have been introduced into high-end models of international customers, and the high-voltage solid and high-capacity ni95 products have been verified by international customers. The development of lithium rich manganese based products and lithium manganese iron phosphate of the company is progressing smoothly. The company has reached cooperation with Ganfeng lithium battery, Weilan new energy and other solid-state battery customers, and obtained the intention order of more than 25000 tons of solid-state battery materials of Weilan. The company takes the lead in the layout of new technologies and is expected to obtain a premium for new technologies.
Risk tip: the sales volume of electric vehicles is lower than expected; The production progress is less than expected; Demand for high nickel was lower than expected.
Investment suggestion: raise the profit forecast and maintain the “buy” rating. The company’s cathode shipment increased rapidly, the layout of raw materials was optimized, and the profitability of cathode single ton profit increased rapidly. The company’s new product layout is perfect, high nickel products are progressing smoothly, and overseas customers cooperate closely. Based on the marginal optimization of profitability brought about by the improvement of the company’s raw material end layout and product structure, we raised the original profit forecast. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 1.352/19.52/2.879 billion yuan (the original forecast was 1.102/1.430 billion yuan in 2022 / 2023), with a year-on-year growth rate of 24 / 44 / 48%, diluted EPS of 2.67/3.85/5.68 yuan, and the current share price corresponding to PE is 28 / 20 / 13 times respectively, maintaining the “buy” rating.
